Midweek Macro Note: The Energy Situation This Week, NFP Preview - July, Asia Update Part 8

In the Midweek Macro Note we discuss the energy situation this week, talk about our nonfarm preview for tomorrow, and highlight Asia in 'Asia Update Pt 8'...

Don Johnson (@DonMiami3), Chief Economist

Good Thursday evening MacroEdge Readers & Community,

This week has absolutely flown by with my Monday travel day - and it already feels like we’re nearing the end of it. Hopefully you had some time yesterday evening to catch up with our announcement relating to Oil and Gas Research. This addition to MacroEdge is going to be transformative - especially as we continue to navigate a complicated global energy landscape. Much of theme for the remainder of the year in Oil and Gas Research I expect to revolve around being patient for the next few months as the inventory situation and reality catch up to markets - but with things remaining as dynamic as they and governments intervening as much as they are around the globe - we will be providing all of the necessary information and data to remain diligent and make good decisions during this murky period of time. Make sure to subscribe to Oil & Gas Research below, and don’t miss the Saturday welcome note from the team:

In markets today, we saw some of the euphoria from the front half of the week fade as it has become clear that the headline lies can only work for so long from a market manipulation standpoint. While they aren’t done being deployed, the clock continues to tick on the oil inventory situation both in the United States and globally. Notably, July marked the first time in decades that the US imported no oil from Saudi, and with our declining exports in recent weeks, it’s clear that barrels are starting to be re-routed domestically as the market for them becomes more competitive. The ‘TACO trade’ will remain intact through the midterm period, but that’s just 3 months away now, and the Iranians know they can inflict maximum pain by simply doing very little, keeping the Strait effectively closed, and attacking tankers in the Red Sea through their proxies in Yemen. While the entire region seems to be on the verge of ‘tinderbox’ status once again, there’s also the entire market situation ex-oil everywhere else in the globe that remains completely unhinged, too.

Tomorrow is a non-farm payroll day, which we’ll discuss briefly below - and I expect that the Trump Administration will likely cook something mid-range or to the downside in order to cap a further yield rise in the interim. With a rate hike very much on the table for next month (about 70% pricing for a hike this year) - bond vigilantes have arrived on the scene late, but will play an important role in potential Fed action for the remainder of the year. I think if we get a hot labor print for July, again - even not putting much weight into these initial NFP reports any longer - a September rate hike will shift to 80-90% odds immediately following and then retreat over the coming weeks. If there’s a super hot print, it may actually have an opposite reaction than implied in a ‘good headline’ as the market is looking for lower yields.

This evening - we’re going to cover:

• Reports for the Remainder of the Week

• The Energy Situation This Week

• NFP Preview - July

• Asia - Clock Ticks On

Reports for the Remainder of the Week

• (Friday) AI Bubble and Data Center Construction Situation Part 3 of 5

• (Saturday) A Welcome Note from the Oil and Gas Research Team - O&G Research

• (Saturday) Redeye Macro Note - A Brief Recap on NFP and the Week, MacroEdge Global Bubble Index Update

• (Sunday) Weekly Macro Note

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The Energy Situation This Week

Oil traders (and bulls) just need to keep their heads screwed on and stop looking at 5-minute charts, as I continue to see on X:

The current setup continues to look very constructive - even in the face of the relentless ‘TACO’.

Continued below… “The Energy Situation This Week Continued… NFP Preview, July… Asia - Clock Ticks On’ - read the full report with Ozone: